This post is a summary of a book review essay, published at http://www.foreignaffairs.com, on October 2012. And was written by Jeffrey D. Sachs, professor at Columbia University and adviser to U.N. Author of "The Price of Civilization"(2011). The title is above.
According to the economist Daron Acemoglu and the political scientist James Robinson, economic development hinges on a single factor: a country`s political institutions, more specifically, as they explain in their new book, "Why Nations Fail," it depend on the existence of "inclusive" political institutions, defined as pluralistic systems that protect individual rights.
The broad hypothesis of "Why Nations Fail" is that government that protect property rights and represent their people preside over economic development. Their causal logic runs something like this: economic development depend on new inventions, and inventions need to be researched, developed, and widely distributed. Those activities happen only when inventors can expect to reap the economic benefits of their work. The profit motive also diffusion. Western readers will take comfort in the idea that democracy and prosperity go hand in hand and that authoritarian countries are bound to either democratize or run out of economic steam.
This tale sounds good, but it is simplistic. Although domestic politics can encourage or impede economic growth, so can many other factors, such as geopolitics, technological discoveries, and natural resources, to name a few. Acemoglu and Robinson`s simple narrative contains a number of conceptual shortcomings. For one, the authors incorrectly assume that authoritarian elites are hostile to economic progress. In fact, dictators have sometimes acted as agents of economic reforms, often because international threats forced their hands. After Napoleon defeated Prussia in 1806, Prussia`s authoritarian rulers embarked on administrative and economic reforms in an effort to strengthen the state. The same impulse drove reforms behind Japan`s Meiji restoration in the late nineteenth century, and South Korea`s industrialization in the 1960s. China did not become the fastest-growing economy in history after 1980 thanks to domestic invention, it did so because it rapidly adopted technology that were created elsewhere. It has aimed, with great skill, to integrate its local production into global tech systems in the process.
The overarching effect of these analytic shortcomings is that when Acemoglu and Robinson purport to explain why nations fail to grow, they act like doctors trying to confront many illnesses. Whether a sick body or an underperforming economy, failure can arise for any number of reasons. Bad governance is indeed devastating, but so, too are geopolitical threats, adverse geography, debt crises, and cultural barriers.
As for the future of development, Acemoglu and Robinson`s narrow focus on political institutions offers insufficient predictive help. Consider how ineffectual the theory would have been at foretelling the global winners and losers in economic development from 1980 to 2010. The authors tell a story many want to hear: that western democracy pays off not only politically but also economically, yet, economic life neither so straighforward nor so fair. Authoritarian regimes sometimes achieve rapid growth, and democracies sometimes languish. Author`s story sometimes is right: politics matters, and bad governance can kill development. Yet the key to understanding development is to remain open to the future complexity of the global processes of innovation and difusion and the myriad pathways through which politics, geography, economics, and culture can shape the flows of technology around the world.
Hinge - depend entirely on
Preside over - be in charge of a situation.
Steam - force of movement
Overarching - dealing with everything
Languish - grow weak or feeble
Myriad - very great number
